Jindal Drugs Private Limited And Ors vs. The Union Of INDIA Thr. Sec.
Original PDF →Facts
The petitioner, Jindal Drugs Pvt. Ltd., filed a writ petition seeking to quash orders-in-original passed by the Assistant Commissioner of Customs (Export) and the Assistant Commissioner of Customs, Drawbacks/IGST Cell. These orders granted statutory interest on IGST refunds, but the petitioner contended that the calculation was incorrect and not in accordance with Section 56 of the CGST Act. The petitioner had previously succeeded in a writ petition (W.P. No. 4445 of 2021) where this Court directed the respondents to sanction refund along with statutory interest. The impugned orders sanctioned interest amounts of Rs.1,94,195 (later reduced to Rs.92,801) and Rs.50,390, which the petitioner argued were significantly lower than what was legally due. The revenue, while not fully justifying the orders, was unable to confirm adherence to Section 56 of the CGST Act as interpreted by this Court.
Held
The Court held that the impugned orders, specifically the order dated 20.08.2022 (operative paragraph (b)), the corrigendum dated 13.09.2022, and the order dated 01.09.2022 concerning the interest amount of Rs.50,390, were not in accordance with the law. The Court noted that the impugned orders did not provide any reasons for the reduction in the sanctioned interest or demonstrate that the calculation was made as per Section 56 of the CGST Act. The Court declined to undertake the exercise of calculating the correct interest amount itself, stating it was the mandate of the law and the concerned authorities to follow the statutory provisions and binding decisions of the Court. The Court emphasized that once a direction for statutory interest was issued, a proper exercise in that regard should have been undertaken by the authorities. Therefore, the Court set aside the relevant portions of the impugned orders and directed the concerned Designated Officer to undertake a fresh exercise of determining the interest amounts strictly in accordance with Section 56 of the CGST Act and the Court's previous judgments in Altisource Business Solutions India Pvt. Ltd. and Lupin Ltd. This exercise was to be completed within 30 days after granting an opportunity of hearing to the petitioner. All contentions of the parties were expressly kept open.
Key Issues
1. Whether the impugned orders dated 20.08.2022 and 01.09.2022, to the extent they grant interest at 6% from the date immediately after the expiry of sixty days from the date of the Court's order dated 02.05.2022, are valid and legal, and whether they comply with Section 56 of the CGST Act? 2. Whether the petitioner is entitled to the full statutory interest as provided under Section 56 of the CGST Act, and whether the calculation of interest in the impugned orders is erroneous? Petitioner's Arguments: The petitioner argued that the calculation of interest in the impugned orders was in contravention of Section 56 of the CGST Act and the previous order of this Court dated 02.05.2022. They relied on decisions of this Court in Altisource Business Solutions India Pvt. Ltd. vs. Union of India and Lupin Ltd. vs. Union of India to support their claim for statutory interest as per the law. They prayed for the quashing of the impugned orders and a direction to grant the full statutory interest of Rs. 45,03,963/- Revenue's Arguments: The learned counsel for the revenue, Mr. Mishra, while attempting to justify the orders, was unable to demonstrate that the mandate of Section 56 of the CGST Act, as interpreted by this Court in the cited decisions, had been correctly applied in the impugned orders.
Sections Cited
Section 56, Section 16(3)(b), Section 54, Rule 96
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
“ORDER (a) … …. ….. (b) I hereby sanction an interest amount of Rs.1,94,195/- (Rupees One Lakh Ninety Four Thousand One Hundred Ninety Five Only) on IGST refund sanctioned on the above para(a).”
However, subsequently on 13 September 2022 another order was issued which was in the nature of the corrigendum to the said order in original dated 20 11/02/2026 P. V. Rane
8WP1810-23(C).DOC August 2022, whereby, the sanctioned of interest of Rs.1,94,195/- on IGST refund was reduced to an amount of Rs.92,801/-, and accordingly, the order-in- original dated 20 August 2022 came to be modified / substituted. There is a further order passed in regard to the other shipping bills dated 1 September 2022 by an another officer i.e. Assistant Commissioner of Customs, Drawbacks /IGST Cell, Nhava Sheva whereby an amount of Rs.64,36,666/- came to be granted, whereby on such amount, an interest of Rs.50,390/- was granted to the petitioner.
The grievance of the petitioner is that the calculation of the interest as awarded by such order, is in fact in the teeth of the statutory provisions i.e. the rates which are specified under Section 56 of the CGST Act. In support of his contention, and the entitlement of the petitioner to the statutory interest, in the context of the petitioners’ application as made under Section 54 of the Central Goods and Services Tax Act, learned Counsel for the petitioner has placed reliance on the decisions of the Co-ordinate Bench of this Court in Altisource Business Solutions India Pvt. Ltd. vs. Union of India1; and Lupin Ltd. vs. Union of India2. It is hence the contention as urged on behalf of the petitioner that considering the provisions in law, the prayers made in the petition deserve to be granted.
Mr. Mishra, learned Counsel for the revenue, although would justify the orders, however, is not in a position to justify that the correct mandate of Section 1 (2025)35 Centax 267 (Bom.) 2 (2025)33 Centax 282(Bom) 11/02/2026 P. V. Rane
8WP1810-23(C).DOC 56 of the CGST Act, whether at all has been applied in the impugned order being passed and, more importantly, as interpreted by this Court in the said decisions.
On perusal of the impugned orders, we do not find, as to on what basis, a reduction in the interest being earlier granted to the petitioner, has been made and / or the calculation of interest whether at all is made as per the provisions of Section 56 of the CGST Act, for the reason that no reasons or discussion on such aspect is borne out by the impugned order. Although the petitioner would desire that this Court in the present proceedings in exercise of its juri iction under Article 226 of the Constitution undertake such exercise and determine the amounts payable, we are, however, not inclined to undertake such exercise of accepting the calculations as placed on record on behalf of the petitioner and step ourselves into the shoes of the said authorities in determination of the correct amount of interest. It may be observed that it is the mandate of law which would be required to be followed, and more particularly, when the revenue is already guided by the provisions of law and the binding decisions of this Court on the manner in which the interest ought to have been calculated, by applying such statutory provisions, which would also be in compliance of the orders dated 2 May 2022 passed by this Court on Writ Petition No.4445 of 2021 as filed by the petitioner.
In our opinion, in fact once the Court has directed as far as back on 4 May 2023 that the petitioner would be entitled for ‘statutory interest’, an appropriate exercise in that regard ought to have been undertaken and as acceptable in law 11/02/2026 P. V. Rane
8WP1810-23(C).DOC and the petitioner was not required to approach this Court on any such issue.
In this view of the matter, we are inclined to set aside the order dated 20 August 2022, insofar as the operative paragraph (b) is concerned, as also the corrigendum dated 13 September 2022, as also the order-in-original dated 1 September 2022, insofar the amount of interest at Rs.50,390 has been determined as payable to the petitioner.
We direct the concerned Designate Officer of the respondents to undertake a fresh exercise of determination of the interest amounts, strictly as per the provisions of Section 56 of the CGST Act, and determine the amount of interest payable to the petitioner strictly in accordance with law and the directions of this Court in Altisource Business Solutions India Pvt. Ltd. (supra) and Lupin Ltd. (surpa).
Let this exercise be undertaken and an appropriate order be passed after granting an opportunity of a hearing to the petitioner within a period of 30 days from today. All contentions of the parties in that regard are expressly kept open.
We hope that on these issues, there is no further litigation and the concerned officer would accordingly act in the light of what has been observed hereinabove.
Disposed of in the aforesaid terms. No costs. (AARTI SATHE, J.) (G. S. KULKARNI, J.) 11/02/2026 P. V. Rane
Reproduced from the public record of the Bombay High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.